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Management Liability

Directors are responsible for the risk management of their business, but are often not fully aware of their responsibilities. With increased regulatory requirements & legislation, owning and running a business can be quite daunting.

Management liability insurance can cover the business against claims arising from mistakes or deliberate actions from the company or its directors, officers or employees

The legal costs to defend allegations of wrongful acts can be financially crippling for businesses and individuals. Without adequate protection you could risk losing, not only your business, but also your personal assets.

What does Management Liability Insurance Cover?

  • Damages and claimant costs awarded against you
  • Defence (i.e. legal) costs
  • Investigation costs
  • Civil fines & pecuniary penalties.
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Management Liability Packages can vary between insurers, but will normally cover the following risks:

Directors and Officers Liabilities

Will protect the past, present and future directors and officers plus anyone else involved in the management of your company

Claim examples

  • Unfair Competition
  • Fraud/Breach of Fiduciary Duty
  • Misappropriation of Trade Secrets
  • Insolvent Trading
  • Manslaughter

Employment Practices Liabilities

A large portion of Management Liability claims arise from Employment practices.

Claim examples

  • Bullying/Harassment
  • Unfair Dismissal
  • Discrimination

Statutory Liabilities

Protects companies and individuals against liability for statutory fines and penalties that are a result of unintentional breaches of legislation.

Claim examples

  • Occupational Health and Safety Breach (Note: WHS fines are not covered in NSW)
  • Environmental Protection Agency Breach
  • Fair Trading Act Breach
  • Other Pecuniary Penalties (Civil Penalties)

Crime Cover

Provides cover to the company for loss arising from dishonest acts such as theft and fraud by employees, contractors or shareholders.

Claim examples

  • Theft by Employee
  • Theft of Inventory
  • Theft by Contractor/Consultant

Corporate Entity (Company) Liabilities

Extremely relevant for companies that are owned by the directors by providing cover to the company for actions arising from managerial matters. A claim against the company will cause the same financial hardship to the owner; therefore this cover is extended to provide protection to the company.

Many of the same claims against the directors and officers will, typically, be brought first against the company.

Claim examples

  • Wrongful Act/Fraud
  • Shareholder Dispute
  • Shareholder Employment
  • Breach of Contract

Other Covers

  • Tax Investigation
  • Public Relations Expenses
  • Crisis Containment
  • Kidnap & Extortion

 

Who can bring an action against a company, its directors, officers and employees?

  • Regulators (e.g. ACCC, ASIC & the ATO)
  • Employees
  • Competitors
  • Creditors
  • Shareholders (especially minority shareholders)
  • Clients
  • Liquidators/Administrators

TIP: Management Liability Insurance is not the same as Professional Indemnity Insurance

Professional Indemnity ('PI') Insurance responds to claims from third parties who have suffered a financial loss due to your professional services and advice. This is related to your 'business activities'.

Management Liability responds to claims from third parties who have suffered a loss due to the mismanagement of your company. This is related to the 'management of a business'.